Inmet gets $88m in Troilus case (January 16, 2002)

A British Columbia court has awarded $88.2 million to Inmet Mining (IMN-T) for breach of contract in the aborted sale of the Troilus gold mine in north-central Quebec. The decision is against Homestake Canada, now a wholly-owned subsidiary of Barrick Gold (ABX-T).

Madam Justice Deborah Satanove of the B.C. Supreme Court ruled that Homestake had repudiated the contract under which Inmet would have sold the Troilus mine. She found that Inmet was entitled under law to specific performance of the contract, but instead awarded equitable damages.

The amount of damages is the difference between the $178-million price set in the original deal, and $90 million, the then-current estimate of the mine’s value at the time of trial.

Inmet and Homestake Canada had reached a deal in October, 1997, for Homestake to purchase the Troilus mine for $178 million. On Dec. 5 of that year, Homestake notified Inmet that it had found problems with the Troilus data set that Inmet had provided, and it would not close the deal. Inmet sued, seeking completion of the sale.

The central issue at trial was whether Inmet had misrepresented the grade and tonnage of the Troilus deposit, and whether Homestake had relied on Inmet’s representation of reserves and resources in deciding to buy Troilus. The court found that Homestake had largely been aware of faults in the Troilus data base before signing the agreement.

Richard Ross, president of Inmet, said the award of damages “fell within the range of damages we were seeking…we think it’s a very good judgment.”

Barrick is currently reviewing the judgment to see whether it wishes to take the case to the British Columbia Court of Appeal. Vince Borg, Barrick’s vice-president, corporate communications, said Barrick’s lawyers were examining the judgment but could not comment on any facets of it at presstime.